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S. Korea Situation Getting Worse

South Korea may face an economic downturn before it sees a meaningful rebound. This means President Moon Jae-in’s “income-led growth” policies have failed to provide the impetus for economic growth, Yonhap reported. Global economists forecast Asia’s fourth-largest economy will take a turn for the worse in the coming months due to sluggish domestic demand and a cyclical decline in semiconductor exports. “The Korean economy is turning for a worse outcome in 2018, perhaps not massively but noticeably,” Alicia Garcia-Herrero, Asia-Pacific chief economist at Natixis, told The Korea Times. Natixis has recently adjusted its growth forecast for 2018 from 3% to 2.8%. She expects Korea will experience a trade and investment slowdown after a cyclical upturn and also suffer from the aftereffects of the higher minimum wage and potentially higher corporate taxes. The nation’s gross domestic product grew 0.6% in the second quarter of the year from the first quarter, a major setback from the previous quarter’s 1.1% expansion.